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Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Total Company Office Chicago Minneapolis Sales $ 468,000 100% $ 156, 000 100 % $ 312,000 100% Variable expenses 234,000 50 % 46,800 30% 187, 200 60% Contribution margin 234, 000 50 % 109, 200 70 % 124,800 40% Traceable fixed expenses 131,040 28% 81, 120 52% 49,920 16 % Office segment margin 102,960 22% $ 28,080 18% $ 74,880 24% Common fixed expenses not traceable to offices 65,520 14% Net operating income $ 37,440 8% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $78,000 per year? Assume no change in cost behavior patterns.

Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Total Company Office Chicago Minneapolis Sales $ 468,000 100% $ 156, 000 100 % $ 312,000 100% Variable expenses 234,000 50 % 46,800 30% 187, 200 60% Contribution margin 234, 000 50 % 109, 200 70 % 124,800 40% Traceable fixed expenses 131,040 28% 81, 120 52% 49,920 16 % Office segment margin 102,960 22% $ 28,080 18% $ 74,880 24% Common fixed expenses not traceable to offices 65,520 14% Net operating income $ 37,440 8% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $78,000 per year? Assume no change in cost behavior patterns.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...
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Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Total Company Office Chicago Minneapolis Sales $ 468,000 100% $ 156, 000 100% $ 312,000 100% Variable expenses 234, 000 50 % 46,800 30% 187, 200 60% Contribution margin 234, 000 50 % 109, 200 70 % 124,800 40% Traceable fixed expenses 131, 040 28 % 81, 120 52% 49,920 16% Office segment margin 102, 960 22% $ 28,080 18% $ 74, 880 24% Common fixed expenses not traceable to offices 65, 520 14% Net operating income $ 37,440 8% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $78, 000 per year? Assume no change in cost behavior patterns.
Transcribed Image Text:Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Total Company Office Chicago Minneapolis Sales $ 468,000 100% $ 156, 000 100% $ 312,000 100% Variable expenses 234, 000 50 % 46,800 30% 187, 200 60% Contribution margin 234, 000 50 % 109, 200 70 % 124,800 40% Traceable fixed expenses 131, 040 28 % 81, 120 52% 49,920 16% Office segment margin 102, 960 22% $ 28,080 18% $ 74, 880 24% Common fixed expenses not traceable to offices 65, 520 14% Net operating income $ 37,440 8% 2. By how much would the company's net operating income increase if Minneapolis increased its sales by $78, 000 per year? Assume no change in cost behavior patterns.
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